Recipharm to acquire two CDMO businesses from Kemwell for SEK1.7bn

Creates a global CDMO leader through acquisitions in US, Sweden and India

Thomas Eldered: 'These transactions represent a significant step in both the consolidation of the CDMO industry and the transformation of Recipharm into a global leader'

Recipharm has agreed to buy Kemwell’s pharmaceutical contract development and manufacturing (CDMO) businesses for a total of SEK1.7bn in two separate deals.

The first, comprising Cirrus Pharmaceuticals' US operations, through the acquisition of its parent company Kemwell Biopharma Inc, and Kemwell AB in Sweden, is expected to close during the second quarter of this year, after review by the Swedsh Competition Authority.

The second, comprising Kemwell Biopharma Private operations in India, is conditional on governmental approvals and is expected to close before the year end.

Recipharm will pay Kemfin Holdings Private, the owner of Kemwell, SEK693m (US$85m) for its operations in the US and Sweden.

The acquisition price for the operations in India is SEK982m ($120m), which Recipharm will finance through a share issue.

Recipharm said the US acquisition will add an operational presence in the region with 'strong development capabilities, an enhanced technology base and broad customer portfolio'.

The acquisitions will also expand the firm's position in emerging markets 'significantly', taking sales there to more than SEK800m.

These transactions represent a significant step in both the consolidation of the CDMO industry and the transformation of Recipharm into a global leader

The addition of Kemwell Private significantly extends Recipharm’s capabilities in India by aligning US and Indian development and technology operations with the combined company’s manufacturing capabilities in India and Europe.

Recipharm also recently bought a 74% stake in Nitin Life Sciences.

In addition, the agreement includes a right of first negotiation to acquire Kemwell’s Indian biopharma business, which is not included in the current transaction, and will continue to be retained by the sellers.

Thomas Eldered, CEO of Recipharm, said: 'These transactions represent a significant step in both the consolidation of the CDMO industry and the transformation of Recipharm into a global leader.

'We now have a US footprint which we can use to further penetrate the world’s largest pharmaceutical market and the business in Sweden provides us with several opportunities for synergies.

'When we receive the approval in India, Recipharm’s customers will have access to very cost effective development and manufacturing capabilities able to serve international markets including the US.'

Anurag Bagaria, Managing Director of Kemwell, added: 'I am confident that together we will be even more successful and we look forward to building on our combined strengths.'

Kemwell's US drug development business is located in Research Triangle Park, North Carolina and employs around 50 people. Services include development of inhalation, liquid, semi-solid, solid and parenteral products with emphasis on early formulation work, as well as analytical methods and testing. The business has also recently commissioned a GMP suite allowing for expansion into manufacturing of clinical trial material.

The Swedish business employs around 210 people at two production units in Uppsala, including a primary and secondary manufacturing facility dedicated to a limited number of products, based on the same API and supplied essentially to one Big Pharma customer.

Kemwell’s Indian business was founded by Subhash Bagaria and employs around 1,400 people. It offers development services as well as commercial manufacturing of solid, semi-solid, liquid and topical dose products.

The solid dosage plant was commissioned in 2008 and has approvals from US FDA and EU, among other regulatory bodies. The oral liquids production plant was commissioned in 2011 and specialises in automated large volume manufacturing, mainly for the Indian subcontinent.

The development business is a rapidly growing business offering formulation development, small-scale manufacturing for clinical trials and a large analytical services business.